The old-school NZ superannuation market continued its slow fade-out in the latest financial year with scheme and member numbers as well as assets under management nudging downwards.
According to figures released at Financial Services Council (FSC) workshop last week, the total number of restricted schemes – a group including employer, master trust and legacy retail superannuation – fell by only one over the year to close at 102.
During the same period, overall restricted scheme membership declined from 162,353 in 2019 to just over 161,000 at the most recent count, Gavin Quigan, Financial Markets Authority (FMA) KiwiSaver and superannuation manager, told the FSC workplace savings group last week,
Funds under management (FUM) in the sector, meanwhile, dropped by over $100 million year-on-year, leaving a closing balance of a tad under $15.1 billion. However, the reporting period likely caught the worst of the COVID crash, suggesting FUM should have recovered in line with markets over the rest of 2020 to date.
Most of the restricted money remains in workplace savings schemes (about $12 billion), a group that comprises 88 schemes including employer-based, three master trusts and the government-run National Provident Fund collective.
The five restricted KiwiSaver providers (dominated by the $770 million Medical Assurance Society scheme) grew FUM and members marginally over the 12-month period, settling at about $1.1 billion and almost 27,000 members by financial year-end.
As at the end of March this year, the broader KiwiSaver sector contained over $60 billion and more than 3 million members.
But while KiwiSaver is underpinned by government mandate and mass adoption, the old-style workplace savings culture relies mainly on employer goodwill and legalities for survival.
Since 2017, the year after the sector joined the Financial Markets Conduct Act regime, eight workplace savings schemes have called it quits as member numbers reduced from almost 167,000 to the current low.
Despite the apparent almost steady-state status of the restricted scheme universe, the sector is inexorably changing both through the cooling energy of demographics and the gravitational pull of master trusts.
For example, several employer-only schemes have transitioned across to master trusts over the period with the $270 million Bank of NZ Officers Provident Association fund reportedly queued up to follow the trend.
According to the EriksensGlobal quarterly master trust survey, the three months ending September 30 saw assets under management in the sector rise by about $150 million to reach almost $7.6 billion. During the quarter the master fund competitive landscape remained largely undisturbed as the AMP NZ Retirement Trust held top spot with $3.4 billion followed by ASB ($1.6 billion) and the NZX-owned SuperLife ($1.2 billion).